Blackberry cutbacks lead Jabil to expect lower earnings

By: Frank Antosiewicz

September 27, 2013

ST. PETERSBURG, FLA. — The cutbacks at Canadian smart phone maker Blackberry Ltd. are causing contract manufacturer Jabil Circuits Inc .to scramble to lower its earnings expectations for next year, according to a webcast discussing its latest earnings.

Jabil officials said that they are anticipating charges of $35 million to $85 million in fiscal 2014 due to ongoing discussions with Blackberry. The company also lowered the range for its guidance for net revenue in the first quarter to $4.35 to $4.65 billion.

“We’re in discussions in how to wind down the relationship,” said Jabil CEO Mark Mondello during the presentation.

Jabil said that during the recently completed fiscal year, Blackberry accounted for 12 percent of its business, second only to Apple (19 percent). However, it forecast that its High Velocity segment that includes Blackberry will decline by 25 percent.

Mondello said Jabil has significant infrastructure in place supporting Blackberry. The unspecified cuts will affect both infrastructure and personnel.

Blackberry announced Sept. 20 that it was targeting a 50 percent reduction in operating expenditures by the end of the first quarter of 2015. It also said that it was reducing its worldwide workforce by 40 percent, which means about 4,500 less employees.

Jabil said Wednesday that it had record earnings, including $4.8 billion in sales for the fourth quarter and $18.3 billion for the 2013 fiscal year.

Jabil added Nypro Inc. of Clinton, Mass., to its fold a few months ago.